A little over a month after SCANA Corp. announced it had entered into an agreement with the Fayetteville Public Works Commission (PWC) to jointly build and own a natural gas-fired 500 MW power facility in Fayetteville, NC, the company reported that the deal is dead.

The general manager of Fayetteville PWC recommended that the city withdraw from the deal unless SCANA agreed to assume a greater portion of the potential financial risk in the event that the project could not be completed on time. SCANA refused to budge, and the city voted last Monday to pull out of negotiations.

“We indicated to the PWC and City Council our belief that this project could be completed on time and on budget, so we are certainly disappointed in Monday’s decision to not go forward,” said Berry Gibbes, president of South Carolina Pipeline Corp., SCANA’s natural gas transmission subsidiary. “This project was proposed as a 60-40 partnership from the beginning. Unfortunately, the PWC took a pessimistic view of the regulatory risk and potential time delays, which in the end, affected their confidence.”

SCANA entered an agreement with Fayetteville PWC on Nov. 10 to construct and co-own the proposed $265 million power facility. Under the agreement the PWC would own 60% of the plant, and SCANA would take a 40% share. Additionally, SCANA agreed to build a 106-mile gas pipeline lateral to attach to the company’s existing line in South Carolina. The pipeline, estimated to cost $90 million, was to be owned and funded exclusively by SCANA (see NGI, Nov. 20).

“It was a difficult decision for them to make. And while we regret their decision, we respect and accept it. This was a great opportunity to ensure a reliable, low-cost supply of electricity to meet Fayetteville’s growing demand for energy, while at the same time introducing a valuable second source of firm natural gas transmission capacity into eastern North Carolina that could have supported future economic development in that part of the state,” said Gibbes.

SCANA said it received written notification of termination of the agreement on Tuesday

“We put together a strong team and a strong proposal. We will continue to look for other opportunities to expand our natural gas pipeline system to ensure adequate supplies to growing gas markets in South Carolina and North Carolina,” said Gibbes.

Alex Steis

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